Duhaime's Law Dictionary


Syndicate Definition:

A formal, informal or secret group of individuals or, more usually, corporations, formed to carry on a specified purpose.

Related Terms: Corporation, Association

Historically, a syndicate was associated with organized crime, as in individuals secretly associating themselves to a criminal plan or organization dedicated thereto.

According to the 2nd Edition of the Encyclopedia of American Law (2004):

"Syndicate: An association of individuals formed for the purpose of conducting a particular business.

"A syndicate is a general term describing any group that is formed to conduct some type of business. For example, a syndicate may be formed by a group of investment bankers who underwrite and distribute new issues of securities.... Syndicates can be organized as corporations or partnerships."

In contemporary corporate or securities law, syndicates are perfectly legal contracts in which corporations or banks work together - short of incorporation - in regards to a common goal, as in the promotion of a particular stock, mining projects, or the licensing or otherwise managing a particular process, product or service by creating an exclusive club through a contract of syndication.

Syndicate often start off by way of written agreement between the members and evolve, from time to time, to full incorporation, depending on the needs of the members, of the syndicate itself, and of the advantages or disadvantages of the relevant corporate laws within the sphere of operation of the syndicate.

REFERENCES:

  • Lehman, J. and Phelps, S., eds., West's Encyclopedia of American Law, 2nd Ed., Volume 9 (Farmington Hills, Michigan: Thomson Gale, 2004) page 427.

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